Legacy Wills blog

The importance Of Wills For Co-habiting Couples

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If you are in a cohabitation relationship and you have not made a Will, you run the risk of leaving your partner in a very difficult position in the event of your death. Fortunately, the solution is straightforward as making a Will can solve these problems.

Recent research indicates that the majority of cohabitants believe that they will have similar inheritance rights to those of married couples. This is not correct. There is also a common belief that common law marriage exists, but again this is not the case.

What is the position for unmarried couples?

The legal position is that unmarried couples have no right to automatically inherit assets from a deceased partner. On death, property and assets are distributed either according to the terms of a Will or in the absence of a Will, the laws of intestacy. The laws of intestacy will benefit a spouse or civil partner, children and other family members. They will not automatically benefit a co-habiting partner and you may have to go to court to benefit from the estate. A Law Commission report into cohabitation rejected a reform of the intestacy laws to include an automatic right for co-habitees to inherit leaving a claim through the courts as the only option. In the absence of a change in the law, therefore, the onus is on a cohabiting couple to make Wills that set out exactly how they would each wish their property and assets to be dealt with in the event of their death.

Children of Cohabiting Couples

The myth of common law marriage also impacts on children of the relationship and who shall have care of them in the event of their parent’s death. The legal position of a minor child of unmarried parents may in certain circumstances be different from the legal position of the child with married parents. Parents who are married when their child is born both acquire parental responsibility for their child. Parental Responsibility (‘PR’) enables the parents either together or separately, to make important decisions about the child such as educational needs or medical treatments. Where the parents of a child are unmarried at the time of the child’s birth only the mother will automatically have parental responsibility. The child’s father may have to enter into a formal Agreement with the child’s mother that is then registered with the court or he will need to obtain a formal PR Order. The child’s father will acquire PR if he marries the child’s mother or if he is registered on the birth certificate, where the child was born after the 1st December 2003. In all cases, but particularly where there is only one parent with PR, it is very important that consideration is given to who shall acquire PR and care for the child on your death. If this issue is not addressed by appointing a guardian in your Will then it may well be left for the court to make the decision. The appointment of a guardian will transfer PR to the person of your choice.

Property Ownership for Cohabiting Couples

Property ownership can cause additional concerns as to whether the property should be held as joint tenants or tenants in common. If you have contributed differing amounts of money to the purchase or to improvements you may want to hold the property as tenants in common to reflect a differing share. If you have not made a Will your share will not pass to your partner and they may end up owning the property with your relatives. Without a Will you will also be unable to guarantee that your children maybe from an earlier relationship actually retain their home or certainly your monetary interest in it.

A Will is the Answer

Making a Will resolves the uncertainty that a cohabiting partner could face in the event of your death. It is a simple step that you can take to ensure that, at a time when they are grieving for you, they will not have to endure the additional worry of not having access to money, potentially losing the roof over their head and

having to approach the court to secure care of your children. Making a Will is normally straightforward and is likely to cost less than you might think. An experienced lawyer will ask you for details of your circumstances, discuss your wishes and prepare a Will for checking with you. If you wish, we can also provide tax advice.

To find out more information visit www.legacy-wills.co.uk

10 Good Reasons Why You Should Make A Will

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Amazingly over 70% of people do not have an accurate and up to date Will. Make sure that you are not one of them – or you risk dying intestate (in other words without indicating who should inherit your property). This is likely to result in a very uncertain future for your friends, family and even business partners. Making a Will is common sense and is probably less expensive than you might imagine – we offer a value for money fixed price for Wills. The consequences of having no Will can be significant and include;

1. You have no control over what happens to your property – instead the intestacy rules will apply which set out in law which family members should inherit your property and in which proportion.

2. There may be disagreements as to how your assets are divided between your loved ones. Sadly it is increasingly common for relatives to take legal action amongst themselves in arguing over family property. Don’t leave any uncertainty – make your wishes crystal clear.

3. Your family might become involved in unnecessary costs or delay – the financial cost alone of contesting a Will can be significant – amounting to many tens of thousands of pounds

4. You do not choose who looks after any young children – if you do have youngsters, it is much better to clearly indicate in your Will who you would like to care for them you should die.

5. If you were cohabiting without being married, your partner will have no automatic right to any of your property. Worse still they could even be evicted from your home.

6. There may be insufficient money left to comfortably provide for your partner or spouse.

7. Your family home might need to be sold to distribute your estate unless you make the position clear. This could even leave your spouse homeless.

8. There is a risk that your estate may have to pay more tax unnecessarily. Those who don’t consider tax planning as an essential part of making a Will may find that they run the risk of their estate having to pay significant amounts of unnecessary tax – leaving less to distribute amongst family and friends.

9. You could find that your business partners are left without protection which could result in a forced sale of your business.

10. Making a Will is common sense and is probably less expensive than you might imagine. To maximize your peace of mind, call us on 0208 547 2583 regarding our value for money fixed prices Wills

TEL: 020 8547 2583 E-MAIL: enquiries@legacy-wills.co.uk

www.legacy-wills.co.uk

The LEGACY Fast Facts Guide About Trusts

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Trusts can;

Allow your beneficiaries to receive your gift without delay.

Allow you to choose you want to benefit

Allow you to change who should benefit

But They Don’t;

Mean you give up control of your assets

Have to be expensive or difficult to set up with help from your adviser

Could you use a Trust?

A Trust is a way of choosing who will receive the benefit of certain assets, without giving your beneficiaries full and immediate control over them. A Trust can also be created by your Will.

Who Is Involved In Setting Up a Trust?

You, as the person creating the Trust, are known as the Settlor or Donor. The people who also manage the Trust are known as the Trustees.

In most cases, it’s necessary to have at least two individual Trustees in place all the time and you must therefore choose additional Trustees to administer the Trust.

These people may need to deal with the Trust if you die so you need to choose them carefully. The beneficiaries are the people who you want to benefit from the Trust. If the Trustees break the terms of the Trust, the beneficiaries may take legal action against them. The beneficiaries are identified in the Trust document.

What Are The Benefits?

Setting up a Trust can be easier than you think and can provide you and your family with real financial benefits.

Can I Change My Beneficiaries?

The Finance Act of 2006 introduced significant changes affecting the way Trusts are treated for Inheritance Tax (IHT) purposes. Most of the Trusts we offer are Discretionary Trusts. This means the Trustees have the power to choose which of the discretionary beneficiaries to pay the Trust fund or gift to and in what shares.

With a Discretionary Trust, the Trustees can appoint benefits to anyone included as a discretionary beneficiary. The Trustees have a Power of Appointment which means they can appoint funds to anyone who falls within the definition of discretionary beneficiaries within the Trust.

The donor can also prepare a Letter of Wishes to guide the Trustees as to which discretionary beneficiaries they’d like to receive the benefits.

The Letter of Wishes isn’t binding on the Trustees, so it’s important that the Trustees are chosen carefully.

Who Do I Appoint As Additional Trustee(s)?

As the word suggests, a Trustee should be someone you trust. For example, your partner, spouse, civil partner, another family member, a close friend. Trustees must be over 18 (16 in Scotland), mentally able and mustn’t be bankrupt. Trustees should sign the Trust form to acknowledgement their appointment. In accepting their appointment Trustees must carry out certain obligations and duties.

Inheritance Tax is charged at 40% on your estate on anything above the Nil Rate Band.

£5.1 billion is the amount of Inheritance Tax receipts in the tax year 2016 /17, an increase on £4.6 billion in 15/16.

Trustees Responsibilities

Trustees must keep records, including Trust accounts, as they may need to prove they are managing any Trust funds properly. For example, records must be kept of any changes made to the investments in the Trust fund and any money paid or loaned to a beneficiary. We also recommend that proof is kept for any professional advice on investments etc.

What Other Powers Do Trustees Have?

The law gives Trustees some powers. These include;

· The power to use income from the Trust for the education of maintenance of a beneficiary who is under the age of 18

· The power to give capital give capital to a beneficiary before they become entitled to demand it

· The power to sell Trust property

· The power to give receipts

· The power to insure Trust property

Other more specific powers may be set out in the Trust form. The range of powers in each Trust can vary depending on the aims of the Trust. Trustees should make themselves familiar with the powers they have.

The standard range gives the following powers;

· The power to exercise any option within any plan for life insurance

· The power to pay benefits to the parent or Guardian to any beneficiary who is not yet 18

· The power to lend money to any of the beneficiaries

· The power to borrow using the Trust fund as security

Can I Change My Trustees?

The power of appointing or removing Trustees belongs to the Donor(s) while alive. If the donor wishes to remove a Trustee and that person is unwilling to sign the form, then the Donor can remove that person by sending a notice of removal in writing to the Trustees at the last known or usual address.

The Trustees being removed must then sign the necessary documentation to complete their removal. If the Trustee isn’t available to sign the documentation the donor will need their own legal advice in order to remove them. If a Trustees retires or is replaced, a new Trustee may need to be appointed.

267,549 estate were issued a Grant of Representation in 2013/14, which accounts for about 47% of all deaths in that year. Source: HM Revenue & Customs 2016

Getting The Money When It’s Needed Most

If an asset isn’t under Trust, your personal representatives (the people you have asked to deal with your estate after you die) will need to get the appropriate ‘Grant of Representation’ before they can deal with the asset. This process is known as ‘Probate’ in England, Wales and Northern Ireland or ‘Confirmation’ in Scotland.

Probate is the legal process of confirming who can deal with the estate of a person who has died before the assets of the estate can be distributed according to the terms of their Will. If someone dies without leaving a Will, they’re said to have died ‘Intestate’. Their estate will be divided according to the rules known as the ‘Laws of Intestacy’.

This can be a long process and can take several months. In the meantime, your family could be suffering financial hardship following your death.

By placing insurance policies in Trust, the need for probate will be avoided as long as there’s one surviving Trustee when you die. This is because the Trustees are the legal owners of the plan, and can deal with the Trust property immediately, making sure your chosen beneficiaries don’t suffer financially after you die.

One of the most common reasons for taking out a protection plan is to provide for your family after you die. By writing the plan in Trust, you can make sure that the proceeds of the plan are paid to them without delay.

Do I Have To Take Out A New Plan To Put It In Trust Or Can I Use An Existing One?

The majority of new protection plans can be written in Trust but changes to existing policies are not always possible, depending on your insurer. Business protection and Relevant Life Plans must be written in Trust from the start.

However, you may want to review your plans to make sure they’re still right for you. We can carry out a review of your plans and recommend appropriate Trusts for them.

Trusts as you can see are very important.

For more information or to discuss your needs, please call John Ireland now

on 0208 547 2583 or email, john@legacy-wills.co.uk

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Common Excuses For Not Making A Will

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Many people put off making a Will for various reasons or excuses. Excuses are a result of a natural defence mechanism linked to the fear of doing something that you either don’t want to think about or have a lack of understanding on how to move forward with the confidence that you are doing the right thing to protect your bloodline. Here are some of the most common excuses people have for not making a Will along with information on why these shouldn’t become a barrier when looking to protect your family and assets.

My partner will automatically get everything – I don’t need a Will

This is not always the case; partners who are not legally married may receive nothing. Without a Will the laws of intestacy determine who will benefit from your estate. For example, if you die without making a Will and you are separated but not divorced, your spouse will still inherit regardless of your intentions however an unmarried partner would get nothing as your estate would be open to claim from bloodline relatives. Also consider what would happen if you both die at once.

My circumstances are about to change

Life is constantly changing; you may be getting Married, Divorced, moving House or having more Children, whilst these events could affect your Will. They should not stop you from making a Will. Often Wills can be written to cater for things that are about to happen, for example in contemplation of marriage, or to give everything to children who survive you by referring to them as your children in general as opposed to naming them individually. It’s a good idea to review your will after every major change in your life to ensure your Will still expresses your current wishes. You can change your Will any time you want; as you grow older you accrue more assets and therefore increase potential inheritance tax liability.

It costs too much to make a Will

People often over estimate the cost of a making a Will, with a basic Single Will costing around £135 and a Mirror Will £270. It is more affordable than you think to put your mind at rest knowing that your loved ones will be taken care of. Dying without a Will can cost much more in the long run, both financially and emotionally.

I’m too young to make a will

Wills are not just for older adults. If you have children under the age of eighteen, you need a will to ensure those assets go to your children and more importantly who should look after your children in the event of your death. Accidents and illness happen when you least expect, often nowadays I hear the phrases like “live today like it is your last” or “you only live once” this is a positive statement to remind us to get the best out of life as we don’t know what’s around the corner. With a Will in place whatever is around the corner you won’t leave your families inheritance to fate.

My family situation is too complicated

It is rare nowadays for family situations not to be complicated, however this only highlights the importance of making a Will. It is vital to discuss the areas that you feel may complicate matters and get the correct advice, most Will Writers offer a free initial meeting or consultation so that you can consider

all of your options and make an informed decision. Without a Will in place your wishes cannot be carried out and this will pass the complications on to your bloodline.

I don’t have the time

Making a Will doesn’t have to take up a lot of your time. If you use a professional Will Writer they will do the work for you and by getting a Will made It will save your family and friends much more, time, trouble and expense after your death.

I can’t decide whether to make a basic Will or use Wills and Trusts

A basic Will is an absolute gift to a chosen beneficiary or beneficiaries and is fine if your wishes are straight forward and you don’t want to protect your estate from timely and costly probate, debt collectors, bankruptcy, inheritance tax and divorce settlements. A Trust can also help you protect your home from being sold to pay for care. The trust acts like a safe deposit box for your assets and instead of the estate going to probate the proceeds of your estate are directed to the trust and are afforded protection by the trust.

I haven’t got much to leave

Often when people take time to sit down and work this out they find they own more than they think. But even if you do have relatively little, but you have minor children, the most important reason for making a will is to select a guardian for them should you and your spouse, if any, die at the same time. Your assets are also likely to increase as you accumulate more throughout your life, a Will can ensure these future assets go to the right people and cause less emotional stress at the time of your death.

I don’t want to think about dying

Nobody wants to think about dying, as the saying goes “life is for living” but what happens if you put off making your Will? At the very worst the people you care about most will receive nothing and the state will get it all. Spending a little time on planning and making your Will can ensure that your loved ones and bloodline are protected. When you make a Will, everything you have worked hard for is protected; your assets will go to exactly the people you want to have them.

Remember you only live once and so do your beneficiaries. Making a Will is the only way to ensure that your wishes are carried out and your loved ones are protected throughout the generations, why not take the first step and talk to us about your wishes as part of our free Will consultation.

Call John Ireland on 0208 547 2583

“Inheritance Tax is a voluntary levy paid by those who distrust their heirs more than they dislike the Inland Revenue”

Roy Jenkins, former Chancellor of the Exchequer 1967 to 1970

Cohabitee Rights

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A landmark legal battle over bereavement damages has prompted a call for cohabiting couples to be given the same recognition as married couples.

Damian Fantato from The Financial Times found that a woman called Jakki Smith, from Lancashire, had taken the government to court claiming it had breached her human rights by denying her the damages following the death of John Bulloch, her partner of 16 years.

If someone dies as a result of negligence, their spouse or civil partner is due a fixed sum of £12,980 but any long-term partner is not recognised.

A judge in the Court of Appeal agreed with Ms Smith, and ruled that she was in a stable, long-term relationship which was  equal to a marriage in terms of the love, commitment and loyalty.

Helen Morrissey, personal finance specialist at Royal London, said: “The number of couples choosing to cohabit rather than marry has been on the rise for many years and so it is remarkable that the rights of couples who choose to live together are not more widely recognised.

“As it currently stands cohabiting couples can live together for many years and raise children together but if the worst were to happen and one partner dies, the surviving spouse would not be entitled to the same level of benefits as their married counterpart and could suffer extreme financial distress as a result.

“It is about time the rights of cohabiting couples were more widely recognised but until then, those who choose to live together should ensure their wills are kept up to date to reflect their current circumstances.”

The figures from the Office for National Statistics show the number of cohabiting couple families increased by 30 per cent between 2004 and 2014, making them the fastest growing type of family in the UK.

It has been found that nearly three million opposite sex cohabiting couple families and 84,000 same sex cohabiting couple families in the UK in 2014.

There is no such thing as common law marriage in UK law but 51 per cent of respondents to the British Social Attitudes Survey thought unmarried couples who live together for some time probably or definitely had a ‘common law marriage’ which gives them the same legal rights as married couples, despite this is not being legally the case.

The Cohabitation Rights Bill, which would provide certain protections for people who live together as a couple and make provision for the property of deceased persons who are survived by a cohabitant, was introduced as a private members bill to the House of Lords in 2014 but has not since progressed.

Teri Gauge-Klein, associate at Russell-Cooke, said: “Although this decision is a move in the right direction if parliament does not act to change the law this will be a shallow victory.

“We wholeheartedly support any attempt to correct what is clearly an anomaly law and not reflective of the society we live in.”

Ms Smith’s legal team had argued the refusal to pay the bereavement damages was a breach of the European Convention on Human Rights.

 

For more information or to discuss your needs, please call John Ireland now

on 0208 547 2583 or email, john@legacy-wills.co.uk

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Reference:

https://www.ftadviser.com/regulation/2017/11/28/landmark-case-prompts-call-for-cohabitee-rights/

The Effects Of Benefit Change For Pensioners

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Thousands of pensioners could be at risk of repossession, when they lose government help with their mortgage payments.

The support for mortgage interest (SMI) handout, which is paid to around 65,000 pensioners, will be withdrawn in April 2018 and replaced by a second mortgage from the government, which will the be be repaid with interest when the property is sold.

However, Royal London has warned that the letters that are being sent out to notify borrowers of the changes are not clear regarding the key details such as the interest rates on the loans, and many pensioners will not have access to the advice.

If they fail to comply with the letter, the borrowers have been warned by the insurance firms that they will lose help with their mortgage and could face repossession if they get into arrears as a result.

The Department for Work & Pensions (DWP) stated the SMI would continue to provide “robust” protection against repossession and recipients will receive written information about the loan.

They will then be able to book an appointment via telephone, with the SMI information provider and the DWP will also make them aware of the independent help and advice.

The government has not yet confirmed the interest rate, that will apply to the loan, investigations by Royal London suggests it initially could be 2.2 per cent.

The insurer said SMI recipients on pension credit, who are interested in only mortgages stretched into retirement, may not have money to pay the balance on the mortgages when they come to an end, this will be exacerbated if they have to pay money to the government on top.

The remaining balance is written off if the SMI loan amount is more than the equity left within the home when it’s sold, this could still leave claimants with no way of purchasing a new property and force them back into the rental market.

To find out more information, please visit www.legacy-wills.co.uk

The Dangers Of Mirror Wills

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If you make a will with your partner and leave everything to them first and your children second, to be almost certain that your wishes will be honoured.

The point of the popular mirror wills set up; you both have identical documents that leave everything to your partner, if they are still alive and your children if they are not.

This means that whoever dies first inherits the lot and the children or other loved-ones get the estate afterwards.

Except that, with a mirror will you can’t actually guarantee that the money will then be left to your children or other loved ones, if your partner decides otherwise.

 

The Financial Times reported in August this year that there had been a 36% surge in inheritance disputes brought to the High Court in 2016. That’s likely to be the tip of the iceberg as most inheritance claims and disputes are resolved privately.

How can one partner’s wishes be ignored?

Mirror wills are often recommended because they are cost-effective and are essentially the same document and the couple can get a discounted rate in comparison to getting two individual wills.

The discount can therefore encourage people to draw up their wills and can be a good thing, more than half the UK adult population does not have a will.

The Co-Op Legal Services website thats that the mirror wills can be a great way to save money. However, it is very transparent about the risks:

The guidance states: “Either party is free to change their will at any time. It is important to know that although a couple’s wishes may be identical, their respective wills are theirs alone. Therefore trusting your partner is vital because if you decide to change your will, you do not have to tell your partner.

“However, just remember, they are not obliged to tell you either! This could be significant particularly if, after your death, the surviving partner re-marries or has further children with someone else.

“If you die first, you may have left your estate to your partner so, if they subsequently decide to change their will, they could pass on your assets to people you do not want.”

What are the alternatives?

There is an alternative to mirror wills, however it is vital to take legal advice.  Tasoula Addison, wills and trusts lawyer at Gorvins Solicitors, explains that people are often not told about the alternatives to mirror wills.

She says: “One solution that we often encourage due to today’s modern family is ‘life interest trusts’ in people’s wills.  Which specify how assets (property, finances etc.) are divided when the remaining spouse passes away.

“Because it is a trust stipulated in the original will of the first to die it is legally binding and so cannot be changed unless everyone agrees, [for example] the children who were originally named.

“However if assets include property then it will require you and your partner to become ‘tenants in common’ rather than ‘joint tenants’.

For more information or to discuss your needs, please call John Ireland now

on 0208 547 2583 or email, john@legacy-wills.co.uk

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Protecting Your Business Against Shareholder Death

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The Problem
A shareholder’s business interest forms part of their estate and passes to their beneficiaries on their death, which could mean that running the business is also left to them.

The issues here are:

  • Beneficiaries may not want to try to run the business or may not know how to. However they will be entitled to the profits and capital.
  • Surviving shareholders may seek approval or consult from the beneficiaries regarding the decisions in business.
  • Beneficiaries may require that business profits are distributed as dividends which may not benefit the business.
  • Surviving shareholders may want to buy out the beneficiaries but may not have the resources.
  • Valuations of the business interest can make things difficult for the beneficiaries to sell the business interest if there isn’t a market for it, lumbering the beneficiaries with shares in a business they do not want nor can sell.

The Solution: Cross-Option Agreements

A cross-option agreement is the grant of put and each shareholder agrees that upon his death his fellow shareholder have the option, but not obligated to buying his shares and his personal representatives have the option, but are not obliged  of selling his shares to the surviving shareholders.

The method for valuing the business interest is outlined in the cross-option agreement and is usually based on market value.

 

Each shareholder takes out a life policy written in trust for the surviving shareholders to fund the deceased business interest under the cross- option agreement. The structuring matters like this means that its possible to ensure that the shareholder’s business interest qualifies for up to 100% business property relief from inheritance tax.

A properly-drafted cross-option agreement coupled with associated life policies ensures that a business can continue without having the uncertainty that a shareholders death can bring. It will also provide a tax efficient mechanism that the beneficiaries can extract value from a business.

For more information or to discuss your needs, please call John Ireland now

on 0208 547 2583 or email, john@legacy-wills.co.uk

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Inheritance Tax

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Data from HMRC has shown a rise in Britain’s inheritance tax bill, which is at an all-time high. Families are paying in excess of 2bn since March this year.

However, despite the problems faced by HMRC for the 22.9 per cent increase in receipts over three months, there is an expectancy of an additional increase of £6.2 billion by 2020/21. Families cannot be complacent with this matter, as now is the time for advice and financial planning.

Other than Inheritance Tax (IHT), there are various other complex forms of taxes. The prospect of paying an amount up to 40 per cent in taxes on their assets that are left behind, which for the older generation is difficult to come to terms with. Many children and grandchildren are ill-equipped with dealing with the nuances of IHT. Therefore, the earlier you start thinking about it, the better and less damaging it will be.

The HMRC figures are evident that there is an increase in the amount of families, that have to deal with IHT due to soaring house prices, while the rise in stamp duty costs are making elderly people contemplate downsizing. Families can take steps to mitigate the impact of this, by getting advice and creating a suitable plan.

The earlier you start thinking about IHT, it becomes easier and less damaging, and creates more options. This does not mean that it is too late, if you leave it late. There are still options available, however you will be more limited.

New rules are introduced early this year and provide relief, such as £325,000 threshold and the new ‘residence nil rate band’ (RNRB) which are transferable, as both tax-free allowances can be passed onto your spouse when you die.

The RNRB is increasing to £175,000 in 2020/21, which means married couples could eventually pass £1m to their children and grandchildren without attracting IHT.

However, the reliefs often come with the caveats and unless you understand what those are, you may risk it by making assumptions.

If you do not consider yourself to be wealthy, you may find the value of yourself or combined estates exceeds the tax-free thresholds.

Anything that reducing the potential IHT bill is worth considering. Estate planning can also help you pass on your wealth to your designated beneficiaries and reduce your taxable estate.

There is plenty that needs to be done to maintain a potential IHT bill to a minimum:

1. Use the allowance for individuals to give gifts up to £3,000 a year without incurring any IHT.

2. Individuals can pass larger amounts of money free of IHT as long as they live for seven years after making the gift.

3. Take in to account of the normal expenditure of the income rule, if you give gifts out of your income and it does not affect your standard of living, they are exempt from IHT and will have no upper limit.

4. Spread your giving over a number of years, rather than a lump sum.

5. Do not give away too much too soon, as it could result in dependency on your children.

To find out more information regarding inheritance tax, click on the link below:

www.legacy-wills.co.uk

The LEGACY guide to Partnership Agreements

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People starting out in business often ask if it is really necessary to have a formal Partnership Agreement in place. The answer is definitely Yes.

If you have no Partnership Agreement in place then the Partnership Act of 1890 applies. The framework provided by the act is simple and straightforward but does not deal with the many complications of trading a century after it was passed. This act does not offer solutions to many of the problems that can arise and may not suit the way that you and your partners want to work together.

Basically, the agreement should set out the rules governing how the partnership operates, and should cover the main ´What happens if …´ situations. If there is no agreement, there will be a large element of uncertainty, and applying the underlying law, such as the Partnership Act 1890, may well lead to unwanted results.

It is usually best to have a partnership agreement drawn up professionally, but before you reach that stage you should think about exactly what you want the agreement to cover. In particular, you should consider:

Running the business

· Partners´ duties

· Working hours and holidays

· Decision-making procedures

· Business premises

· Cars

Financial matters

· Profit-sharing arrangements, and drawings on account

· Partnership capital (and interest arrangements)

· Banking and financial arrangements

· Accounting arrangements

· Making provision for tax payments

Special circumstances

· Partner retirement procedures

· Death of a partner

· Providing for partners’ retirements and dependants

· Disability of a partner

· Establishing the right to expel a partner

· Arbitration for unresolved disputes

· Business valuation procedures

 

For more information or to discuss your needs, please call John Ireland now

on 0208 547 2583 or email, john@legacy-wills.co.uk

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